Performance Rights Organizations
This article is dedicated to help up and coming musicians understand more about the music business by talking about performance right organizations. These companies are an imperative part of the industry and is a must for any musician, independent or not. Hopefully after reading this article, you will have a better understanding of these companies and how they work. If you get confused over some of the terms used, you can always reference our article on terms every musician should know.
A performance rights organization (P.R.O.), also known as a performing rights society, provides intermediary functions, particularly collection or royalties, between copyright holders and parties who wish to use copyrighted works publicly
in locations such as shopping and dining venues. Legal consumer purchase of works, such as buying CDs or downloads from a music store, confer private performance rights. PROs usually only collect royalties when use of a work is incidental to an organization's purpose. Royalties for works essential to an organization's purpose, such as theaters and radio, are usually negotiated directly with the rights holder.
In some countries, PROs are called copyright collectives or copyright collecting agencies. A copyright collective is more general than a PRO as it is not limited to performances and includes reproduction rights organizations (RROs). RROs represent works distributed via mediums such as CDs or downloads rather than use of works in public settings.
That's allot of technical speak. Needless to say that a PRO is essential to your music career. I learned the hard way in the beginning and didn't get registered till later on and missed out on a bunch of royalties that could have come my way. Companies like ASCAP, BMI, and SESAC are the 3 main companies in the US. There are many more across the world. Check your local country's PRO companies. I encourage you to do your research and find the best company for you. If you continue reading, you will learn a bit about the big 3 companies in the US.
The American Society of Composers, Authors and Publishers (ASCAP) is an American not for profit PRO that protects it's members' musical copyrights by monitoring public performances of their music, whether via a broadcast or live performance, and compensating them accordingly.
ASCAP collects licensing fees from users of music created by ASCAP members, then distributes them back to its members as royalties. In effect, the arrangement is the product of a compromise: when a song is played, the user does not have to pay the copyright holder directly, nor does the music creator have to bill a radio station for use of a song.
In 2014, ASCAP COLLECTED OVER $941 million in licensing fees and distributed $828 million in royalties to its members, with an 11.6 percent operating expense ratio. As of July 2015, ASCAP membership included over 460,000 songwriters, composers, and music publishers.
In the United States, ASCAP competes with two other PROs, Broadcast Music, Inc (BMI) and the Society of European Stage Authors and Composers (SESAC). Unlike collecting societies outside of the US, ASCAP's contract is non-exclusive, and although it is not so simple for a foreign person to join ASCAP, it is possible. ASCAP has an office in the UK as well. As the artist agreement is non-exclusive, authors can license using a Creative Commons license. Analyzing the ASCAP bill of rights, it states, "we have the right to choose when and where our creative works may be used for free". If an author is going to use a Creative Commons license with another's works, this is the only author's rights organization that has a non-exclusive contract that a foreign person can join. If an author uses a Creative Commons license and is not a member of a PRO, and the works would generate royalties, these royalties are collected and given to publishers and artists that are members of these organizations.
Broadcast Music, Inc. (BMI) is one of the three United States PROs. It collects license fees on behalf of songwriters, composers, and music publishers and distributes them as royalties to those members whose works have been performed. In fiscal year 2013, BMI collected more than $944 million in licensing fees and distributed $814 million in royalties.
BMI issues licenses to users of music, including:
Television and radio stations and networks
New media, including the internet and mobile technologies such as podcasts and ringtones.
Satellite audio services, such as XM and Sirius
Nightclubs, discos, hotels, bars, and restaurants
Symphony orchestras, concert bands, and classical chamber music ensembles
BMI tracks public performances for 8.5 million works, and collects and distributes licensing revenues for those performances as royalties to over 600,000 songwriters, composers, and music publishers it represents. BMI has offices in Atlanta, London, Los Angeles, Miami, Nashville, New York, and Puerto Rico.
BMI songwriters create music in many genres, including mainstream pop, metal, hip hop, country, and of course electronic music. They represent a huge number of A list artists and labels like Sony/ATV Music Publishing, and artists like Eminem, Rihanna, Maroon 5, Linkin Park, Danny Elfman, and more.
SESAC, originally the Society of European Stage Authors and Composers, is the smallest of the three PROs in the United States. SESAC was founded in 1930, making it the second-oldest PRO in the US. SESAC is also the fastest growing PRO in the US. Based in Nashville, TN, SESAC deals with all aspects of the business, from creation to licensing and administration. The company also has offices in New York, Los Angeles, London, Atlanta, and Miami.
Whereas ASCAP and BMI operate on a not for profit basis, SESAC retains some income as profit. While ASCAP and BMI distribute all income from performance royalties to their composer and publisher affiliates less an administrative fee. SESAC retains an undisclosed amount of performance royalty income. SESAC is also unique among the US PROs in that it does not offer open membership, one must be approved to join.
So now that you have a better understanding of what a performance rights organization is and how they operate, you can make a better informed decision of which one to use. But don't take our word for it, please do your own research to find out which company is best for you and your music.